Financial institutions are using scalable platforms to provide next-generation services to financial customers.
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With the rise of digital banking, the Banking and Financial Services (BFS) market has become increasingly competitive, forcing traditional financial institutions to adapt and evolve.
The global BFS market size was valued at $25.83 Trillion in 2022. It is expected to grow at a CAGR of 9.65% until 2026 to reach $ 37.34 Trillion.
Let us look at the emerging trends:
- 75% of consumers use digital channels to interact with their banks. Digital technologies have allowed traditional banks to reach more customers and offer services. AI and ML are enabling them to provide personalized recommendations.
- Digital banking’s accessibility and convenience align with customer expectations and have promoted industry innovation. They are testing new products and services and adapting to customer needs.
- Open banking – With open banking regulations, banks are opening their APIs to third-party providers to create innovative financial products and services with real-time analytics.
- Digital payments – Using NFC & QR codes, digital banking enables P2P payments, bulk payments for SME & corporate customers, automatic bill payments, and mobile contactless payments on a centralized platform.
- Crypto trading – Crypto trading services that use blockchain and DLT for smart contracts, settlement processes, and crypto-enabled digital payments via multiple exchanges interest financial institutions.
- Neobanks use the infrastructure of traditional banks and allow quick account opening and instant and cashless transactions. Since the costs are low, they can charge lower interest and fees.
They offer consumer-focused services like budgeting, saving, real-time spending alerts, and mobile payments. They are flexible and serve global customers online, benefiting travelers and remote residents.
Competitive Landscape in the BFS
Multiple players are competing for a share of the BFS market. Yet, traditional players like JPMorgan Chase, Bank of America, and Wells Fargo dominate the market.
However, FinTech firms are challenging traditional players with innovative solutions.
Digital-only banks like Chime, Ally Bank, and Varo Money are popular among youngsters.
Square, PayPal, and Stripe offer payment processing. Robo-advisors like Betterment and Wealthfront are challenging investment advisors.
What else is happening in this space?
- Financial institutions use data and analytics to understand customer behavior, manage risk, and personalize products and services.
- Besides, larger institutions gain scale and competitiveness with M&As.
- Additionally, Apple, Google, and Amazon are entering the industry, threatening traditional banks and fintech.
- Moreover, financial institutions are also considering ESG factors as consumers and investors value them.
- Cybersecurity, data privacy, and consumer protection laws complicate the regulatory environment.
Opportunities for Service Providers
40% of adults worldwide lack access to financial services, giving FinTech companies a chance to reach new customers.
This infographic shows opportunities in banking operations, sales & marketing, and customer support.
Opportunity in Banking Operations Space
Blockchain for secure and efficient transactions, AI and ML for fraud detection and risk management, and RPA and cloud to streamline back-end processes are among the biggest opportunities to cut costs, improve efficiency, and delight customers.
Blockchain-based cross-border payments, payment behavior analysis to reduce fraud detection, self-service kiosks with faster authentication, and contactless payments reduce wait times.
JPMorgan Chase & Co. uses blockchain technology to speed payment processing and settlement, while HSBC uses AI-powered compliance software.
IBM Cloud for Financial Services and IBM Consulting are helping Tietoevry accelerate hybrid cloud adoption and deliver innovative payment and transaction technology to banks worldwide.
Opportunity in Sales & Marketing Space
Banks can customize financial solutions using customer data and analytics, targeted advertising, product recommendations, and personalized pricing.
Activities include email marketing automation, automated customer onboarding, churn prediction, and blockchain-based loyalty points tracking and redemption.
Capital One customizes credit card offers using machine learning, while Bank of America uses predictive analytics to find cross-selling opportunities.
For another example, HDFC Bank and NIIT trained many Virtual Relationship Management specialists. The program teaches advanced and in-demand sales skills, helping specialists find new customers for various services and products.
Opportunity in Customer Support Space
Chatbots and mobile banking apps allow banks to serve customers 24/7.
They can quickly and accurately answer common questions using AI and NLP, freeing customer service staff to handle more complex issues.
Ally Assist, Ally Bank’s virtual assistant, provides personalized support using AI.
Deutsche Bank will improve risk management, efficiency, and customer service with NVIDIA AI Enterprise.
Draup conducted a comprehensive analysis of the global BFS industry. Read the report to learn about the in-depth analysis of the market dynamics, digital framework, business intention trends, ecosystem, the profile of major BFS players, and their initiatives.
The Signals Cast application enables sales teams to visualize the market maturity across AI/ML, cloud, RPA, and IoT technologies, view what solutions BFS institutions require, and customize their offerings to address pain points.